Economic growth
Developing the regional economy underpins our ambitions – not only to deliver growth that all citizens benefit from, but also, as the export centre of the UK, that will power the UK economy after Brexit. Economic growth, as measured by GVA has seen strong growth (4% in 2016 compared to 3.7% nationally), however the region is still falling well short of fulfilling its economic potential. The output gap, which measures the difference between per head economic output and potential stands at nearly £17bn across the 3 LEP geography.
-
Total GVA in the WMCA continues to increase and in 2016 was £92bn (4% growth compared to 3.7% nationally). However, the gap between the GVA per head in the WMCA (£22,443) compared to the UK average (£26,621) is not closing, leading to a £16.9bn output gap. GVA growth is fundamental in delivering inclusive growth.
-
The output gap is impacted by skills levels, employment levels and the productivity of our business base. In terms of productivity, GVA per hour has increased by more than double the rate of the UK over the past year and is currently £28.9 per hour worked. However, GVA per hour needs to increase by £3.70 to reach the UK level.
-
The WMCA has received 775 Foreign Direct Investment (FDI) projects from 44 different countries across the world. This has led to the creation of nearly 46,000 new jobs from 2011/12 to 2017/18.
-
In 2017/2018 the West Midlands region created over 9,424 new jobs from FDI projects – the highest level for any region outside London.
-
There have been challenges in calculating the fiscal balance for the WMCA and we will continue to work with ONS to refine and enhance this methodology. The latest methodology estimates a £2.7bn gap between the Income generated by the WMCA and Expenditure – a decrease of £.5bn from the comparable figures for last year due to the identification of additional incomes streams. The tax generated from WMCA residents is estimated at £33.5bn based on the main contributors of Income Tax (22.5%); VAT (18%) and NI Contributions (17%). Public expenditure is estimated at £36.2bn with 45% arising from social protection (which includes sickness and disability, old age, survivors, family and children, unemployment, housing and social exclusion); health (25%) and education with 15%.
Key indicators
Income - £33.5bn
Expenditure - £36.2bn
2.7bn gap
WMCA output gap = £16.9bn
Skills Levels Insufficient
- % with NVQ4 + (WMCA = 30.7%, UK = 38%) = £3.2bn
Too Few in Employment
- Employment Rate (WMCA = 68.8%, UK = 73.8%) = £1.8bn
Economy Lacking in Dynamism
- Business Stock per 10,000 population (WMCA =390, UK =432) % of innovative business (WM = 55%, UK = 53%) = £11.9bn
- £17,113 - BC LEP
- £27,543 - CW LEP
- £23,251 - GBS LEP
- (2015) £21,772 - WMCA
- (2016) £22,443 - WMCA
- (2015) £25,878 - UK
- (2016) £26,621 - UK
BC LEP - £25.5
CW LEP - £31.3
GBS LEP - £29.4
WMCA - £28.9
UK - £32.6
Deepening our Evidence base
Qualitative measures can also provide important insight on economic success, especially in pursuing inclusive economic growth. We will work with partners to understand business perceptions and confidence. The quality and accessibility of jobs is central to delivering inclusive growth, therefore we will investigate developing metrics that identify better work in terms of pay, progression and security.
We continue to work closely with the Office of National Statistics (ONS) on a range of data enhancement projects including refinement of the income and expenditure methodology to develop robust procedures for sub-regional measures which currently are not in place.